Localism Text Q6 - Smith Instituteways demonstrate what “new localism” and “double devolution” can realistically offer. Collectively they not only explore what could be achieved

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real localism

2007real localism

T H E S M I T H I N S T I T U T E

Edited by David Walker

real localism

Published by the Smith Institute

ISBN 1 905370 29 6

This report, like all Smith Institute monographs, represents the views of the authors and not those of the Smith Institute.

© The Smith Institute 2007

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Contents

PrefaceBy Wilf Stevenson, Director, Smith Institute

IntroductionDavid Walker, Editor of The Guardian’s Public magazine

Chapter 1: The equity trap Sir Simon Jenkins, Author of Thatcher & Sons: A Revolution in Three Acts

Chapter 2: Involving citizens in local governance – experience from Newham Sir Robin Wales, Mayor of Newham Council

Chapter 3: Modernising accountability – reform to secure new localism Heather Hancock, Partner at Deloitte

Chapter 4: The further devolution of power in England Don Stewart, Executive Director for Strategy at Yorkshire Forward

Chapter 5: The democratic front line – why councillors have the skills and local legitimacy to engage their communitiesLucy de Groot, Executive Director of the Improvement & Development Agency

Chapter 6: Selling it Dermot Finch, Director of the Centre for Cities

Chapter 7: Making it happen Paul Coen, Chief Executive of the Local Government Association, and Paul Raynes, Programme Director for Regeneration and Transport at the Local Government Association

Chapter 8: The case for root and branch reform Graham Allen, MP for Nottingham North and Chair of One Nottingham

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PrefaceWilf Stevenson, Director, Smith Institute

The Smith Institute is an independent think tank, which has been set up to undertakeresearch and education in issues that flow from the changing relationship between socialvalues and economic imperatives. In recent years the institute has centred its work on thepolicy implications arising from the interactions of equality, enterprise and equity.

As David Walker comments in his introduction to this monograph, “we are all localistsnow”. Indeed, it is quite remarkable how broad the political consensus for local devolutionand decentralisation has become. You hear few politicians or policy makers today arguingthat “Whitehall knows best” or that the nation would be better served by taking powersaway from local councils. The debate is now focused on what follows the dispersal ofpower to Scotland, Wales and London, and how we can strengthen local democracy,empower local councils and improve local services.

How can we, in this ever more complex society, best transform the way councils work withtheir communities and central government; how do we democratise local services andgive people more control and more choice; how much discretion and autonomy should be given to local councils, and in what new policy areas; and what are the short- andlong-term costs and benefits of “letting go”?

According to Hazel Blears, the Secretary of State for Communities and Local Government,“it is the responsibility of everyone who believes that devolving power is the answer – toprove it”. The authors in this monograph take up this challenge, and in different ways demonstrate what “new localism” and “double devolution” can realistically offer.Collectively they not only explore what could be achieved in terms of democratic renewal,active citizenry and local services, but also suggest how local devolution contributestowards local economic development and so-called “place shaping”.

This is a positive and challenging time for local councils. The political momentum is forfurther change and a new partnership between central and local government (andbetween councils and the private and voluntary sectors). But this new era of devolutionmust be firmly rooted in best practice and common sense, and with the capacity andcapability to deliver. As some of the essays that follow point out, the task now for localgovernment is not to talk up the case for localism, but to prove to central government andtheir local community that they deserve more powers and the resources that go with it.


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The Smith Institute thanks David Walker (editor of The Guardian’s Public magazine) foragreeing to edit this collection of essays, and gratefully acknowledges the support ofYorkshire Forward, Deloitte and the Department of Health towards this publication andthe associated seminar.

IntroductionDavid Walker, Editor of The Guardian’s Public magazine

These essays radiate the excitement many feel about the prospects and possibilities ofelected local government (in England – a different dynamic applies in the devolvedadministrations). Intellectually the weather has changed. Local leaders, represented hereby Sir Robin Wales of Newham, are self-confident; their advisers (exemplified here by PaulCoen and Paul Raynes and by Lucy de Groot) throw off the old deference and, carryingthe argument back to central government, put pointed questions to ministers and civil servants.

But the Smith Institute has perhaps termed this collection “real” localism to capture asense of “realistic”. This entails being level-headed in assessing the public’s appetite for thestrenuous democracy demanded by some of localism’s advocates, and in recognising thatlocal political and fiscal capacity has limits. It also implies using common sense about theculture and proclivities of the UK in the 21st century.

In his contribution Sir Simon Jenkins checks off various obstacles to local self-determinationbut, curiously, misses one with which he is intimately familiar – national newspapers andbroadcasting. The internet and Web 2.0 applications are aspatial; they might conceivablybe used inside “place” but equally might diminish a sense of local belonging.

A realistic approach would need to recognise, in addition, the centralising thrust of somethird-sector activities. Advocacy for, say, patients with long-term conditions or dependentelderly people is often loudly antagonistic to variations in social services, yet the potential for variation is what localism is all about.

Gordon Brown’s tenure as Prime Minister – so far – may also prime this “realistic”approach to central-local government relationships. He has proposed constitutionalrenewal and sharper parliamentary oversight over the central executive. Among othermeasures, councils in England have been given new leverage on health provision in their areas. Localists will welcome that. But the government also wants more housing builtand faster resolution of planning applications for big projects; here “realism” meansrecognising that local interests may conflict with national or regional strategy. Some tensions – over land use, say – may be permanent, and we must not pretend devolutionis a universal recipe for reconciling all claims.


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The new consensusWe are all, to coin a phrase, localists now. Let’s set out where agreement is widespread.Start with Whitehall: civil servants recognise their own inadequacies in managing thedelivery chain; the capability reviews of successive departments instigated by Sir GusO’Donnell, the Cabinet secretary, give chapter and verse. The centre, administrativelyspeaking, is less self-confident and more willing to recognise the shared nature of servicedelivery, as Heather Hancock recounts in her essay.

The ground looks fertile for some replanting of the respective responsibilities (andaccountability) of, on one side, ministers and central officials and, on the other, electedlocal authorities and the variety of semi-autonomous public bodies providing services.How that rearrangement is to happen is addressed by the essayists and forms a challengeand opportunity for the Brown government.

Ideas abound. Some of our essayists hint at incorporating into elected local governmentservices that have escaped (schools, the police) or that have never been part of it (health).Alternatively we need to revise definitions of “the local”, to encompass conurbations and“sub regions”. In the sub national review published in July 2007, the Treasury and theDepartment for Communities & Local Government proposed innovating in what ministersdo, giving some of them regional portfolios, together with new parliamentary account-ability for development agencies through regional committees of MPs. Might the democratic regeneration of parliament (a prime ministerial ambition) go hand in handwith democratic renewal locally?

Even the staunch advocates of localism represented in this collection would admit thatthings are far from perfect in the town and county halls, whether measured by electoralparticipation or public understanding of and interest in civic affairs. David Miliband’s“double devolution” may have dropped out of favour as a phrase, but its import remains– it will always be a huge challenge to connect bureaucratic service delivery structures tolocal community activity. How many subscribe to Graham Allen’s casual assumption thatempowered local authorities, able to tax and spend with freedom, would automaticallyreinvigorate local democracy?

Many would agree that councils in England have proven themselves agile – in making efficiency savings, under the “transformational government” rubric, and in effecting partnerships with other players in local services. They deserve un-corseting, and October’sspending announcement threw umpteen of the whalebones away, in the shape of central

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targets. More latitude is needed, some argue, if councils are to respond to shifting movements of capital and people; councils need fiscal flexibility to attempt to shapeplaces. The Brown government has expanded councils’ room for manoeuvre and openedthe way to supplementary local taxation. Dermot Finch, applauds and thinks an incremental suck-it-and-see approach could add finance and policy discretion as councilsgo on proving themselves.

Not far enough? But some localists demand a “big bang”. The government has gone nothing like farenough. Has Secretary of State for Communities and Local Government Hazel Blears’enthusiasm for devolution been matched by her Cabinet colleagues? Missing from Alan Johnson’s appraisal of the commissioning capabilities of primary care trusts is a determined role for councillors in health. Why not extend the principle of direct electionsfrom foundation trusts to primary care trusts? Far better to incorporate them in councilsor put councillors on their boards: in their essay Paul Coen and Paul Raynes argue againstservice-specific solutions, emphasising instead the multifunctionality of councils, givingtheir elected members an area-wide authority.

Peter Hain’s renewed drive to expand employability gave no space to local authorities toprovide or commission job-seeking services. Yet, unlike contractors or Jobcentre Plus,councils are thinking imaginatively about places and about people in places, and havejoined up ideas about the relationship of human and social capital with economic opportunity.

So localists remain unsatisfied. But maybe that is their fate, and centralists’ too, thoughthey are a rare breed these days. What if the demarcation lines demanded by some of ourcontributors can never be cleanly drawn? What if, inside the political and administrativeenvelope of England, central and local are ordained to a permanently scratchy relation-ship, a marriage more Who’s Afraid of Virginia Woolf? than Anglican prayer book?

Examined more closely than is possible in these confines, the relationship between local elected bodies and government at large in other countries turns out to be more complicated and the English condition becomes less of a special case. All states operate as“systems”, in which the pieces more or less hang together. As the Tory years drew to aclose, a strong case was made for the dysfunctionality of the system, and the Blair-Browngovernments attended. But change has taken the form of a pendulum swing, rather thanthe root-and-branch revision demanded by Graham Allen and Simon Jenkins.


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Co-operation and mutualityThe merit of that approach can be tested against the salient events of the Brown premiership so far. Summer 2007 saw emergencies from terrorist attacks to foot-and-mouth; flooding focused public attention on climate change; debate has swirled aroundmigration. These issues all speak to the need for collaboration, not competition, betweentiers of government. Responses to threatening events demonstrated that local authoritiesdo and must have their own arena for discretionary action.

To have to consult Whitehall prior to providing overnight shelter when storms threatenwould be a nonsense. But adequate response to emergencies also requires government towork at a scale larger than the local, in deploying troops or specialists, in intelligencegathering and detection. Central co-ordination depends on the empiricism of local delivery, and vice versa. Of course there are on-going arguments in emergency planning,as elsewhere about balance, spheres of autonomy and respective jurisdictions, but theseevents prized co-operation and mutuality.

A similar point applies to the phenomenon of international mass migration. The capacityof a single local authority to shape place is truncated by wider economic and demographictrends. When people migrate they rarely observe local jurisdictions. They move to Sloughor Peterborough not because of their councils, but because of jobs or kin or fellow citizens. Only central government can secure a match between aggregate benefits frommigration and its local costs.

Some local authorities feel short-changed by the population data and grants distribution.The resulting counter-claims and responses are normal: local government, howeverrobust, cannot be left to fend for itself when the gales of globalisation are blowing people and capital from place to place.

Coen and Raynes note that many people work within a local space and labour markets are spatially delimited, but to say of the retail or construction industries that “economic reality is local” is to exaggerate for effect. Retailing is dominated by four big companies,two of them multinationals. Hire-and-fire and investment may be dictated from a shed inBentonville, Arkansas (the headquarters of Wal-Mart1) and the best protection againstmisuse of power by such economic giants remains (national) trade unions and (national)regulators of competition and health and safety.

1 See Friedman, TL The World is Flat (Penguin, 2006)

But even if council leaders find fighting Tesco difficult, evidence from home and abroadsuggests that they form a vital ingredient in urban regeneration. Cities that prosper usuallyhave a good deal of discretion in their capital investment programmes and borrowingpowers. Even within constraints bemoaned by Dermot Finch, council chiefs such as Sir Richard Leese in Manchester, working in tandem with a go-ahead chief executive (Sir Howard Bernstein), can accomplish much. Manchester’s physical blossoming proves that.But the Tory leader David Cameron was entitled to point to enduring underachievementin Manchester schools, persistent poverty and deprivation on its estates. Manchesterremains a needy city. Its capacity to heal itself is limited. There must be, so progressivesargue, strong (national) schemes to channel resources to Wythenshawe and Hulme;Manchester cannot, nor should it be, left to its own fiscal devices.

Dermot Finch deplores taking a uniform approach to England’s cities. That must be right,in the sense that the historical and economic trajectories of Manchester and Leeds,Liverpool and Newcastle upon Tyne are different, along with their political cultures andresources. Central government has too often imposed single strategies on diverse places,a tendency that continues with the regions, as Don Stewart argues.

Needs go nationalBut the needs of children in Tyneside schools are not noticeably less than their peers’ inMerseyside, nor should training grants or social security payments be given or withheldon the back of geography. In other European countries national welfare schemes are as place-blind as in England. The support the state gives to victims of misfortune or economic dislocation should not be place-specific.

Simon Jenkins claims that local decision making would endear services to the public and they would be willing to pay for more; for this reason, progressives ought all to be localists. Jenkins also says “they should vote for it and they should pay for it”, meaningthat the local fiscal base should be the first port of call for public services, though he subsequently accepts the need for a (national) grants distribution mechanism because of disparities in tax-paying capacity.

This is a trickier issue than he acknowledges. Labour ministers, says Jenkins, “have clearlynot heard of Poplarism and the glory days of discretionary local tax-and-spend”. But theyprobably have, and so know that the revolt of the Poplar Labour councillors in 1921 wasover the refusal of the rich London boroughs to assent to redistribution of their tax take


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to benefit Poplar and the East End.2 George Lansbury and colleagues withheld payment ofa precept to fund London hospitals to focus attention on the lack of an equalisationmechanism.

Equalisation means accepting that council areas can never be sovereign, and that somehigher power must adjudge their needs and deservingness. Iain McLean and his colleagues3

have come up with ingenious mechanisms for sanitising the distribution of grants tocouncils, freeing them from central apron strings. But distribution is always going to bepolitical, because it rests on values that are the very stuff of political debate. Many ofSurrey’s residents have strong views about how much should be spent on single mothersin Stockport or smoking cessation programmes in Peterlee, and they are entitled to them.The resolution of difference is a matter for (national) political representatives, not for aquango staffed by experts or for horse-trading among councils.

Perhaps that is simply to repeat an earlier point: government services are always going tobe a rich mixture of central and local decisions and delivery, and it is hard to see, as a matter of principle, where dividing lines should be etched. They may be in the wrongplace, and the centre has some way to go, as Lucy de Groot argues, in opening its eyes to the human resources and capacity of councils. But few of our contributors assert aread-across between local legitimacy (awarded by elections to councils) and a right to taxor spend a given proportion of the local budget. Sir Michael Lyons4 said councils mighthave access to additional tax revenues and floated proposals for tourist taxes, a councilshare of the proceeds of vehicle excise and so on. These are practical suggestions thatdeserve a tryout.

Social need versus local sovereigntyBut they don’t involve a fundamental rewriting of central-local relationships. They wouldprobably not satisfy Graham Allen, who takes what might be called an ultra-localist line.He believes in local sovereignty, limited only by human rights conventions and what heintriguingly calls “a legitimate inspection regime”. Allen wants to enshrine local autonomynot just in statute but in a sort of time-defying constitutional law. It would, presumably,freeze local government boundaries and, in his neck of the woods, permit Broxtowe orRushcliffe to reject plans for transport or housing proposed by Nottingham city.

2 Branson, N Poplarism 1919-25: George Lansbury & the Councillors’ Revolt (Lawrence & Wishart, 1979) 3 McLean, I and McMillan, A New Localism, New Finance (New Local Government Network, 2003) 4 Lyons, M Placeshaping: A Shared Ambition for the Future of Local Government (Department for Communities & LocalGovernment/HM Treasury, March 2007)


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That would worry Yvette Cooper, who, like activist housing ministers before her (Tory aswell as Labour), says social need trumps local sovereignty. Nottingham residents must beassisted into affordable rental dwellings or private developments even if it means forcingRushcliffe to let go. A parallel issue is providing for groups of people who may form aminority of any local area: say a shire county dominated by older residents refuses tospend on Sure Start or other early years initiatives; intervention by the Children’sSecretary, Ed Balls, would contravene the principle of local autonomy, but potentially liftthe life chances of poor children.

Is that to say central-local relationships in England will always be a set of messy compromises from which clean principles are hard, if not impossible to derive? Several ofthe essayists to follow would dispute that, arguing for a break, and the clear articulationof an elected local authority’s right to say no to central projects and penalties. Otherswould say we must retain an England-wide framework for public services while leavingthe local details open. All would have to agree, however, that practical relationshipsbetween central and local government are in better nick than they have been for a generation and further amelioration lies ahead – give or take a battle or two over annual financial settlements and resulting council tax levies.

As several contributors note, the devolution settlement for Wales and Scotland and, haltingly, Northern Ireland was a dramatic break with the past, and exonerates the Blair-Brown governments from the bland charge of “centralism”. The present administrationdoes, however, have a long way to go – in its practice and public finance, if not its rhetoric– if it is to satisfy the localist opinion expressed in these pages.


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Chapter 1

The equity trap

Sir Simon Jenkins, Author of Thatcher & Sons: A Revolution in Three Acts


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The equity trap

British television viewers in January 2007 were treated to the sight of a captain of industry,Gerry Robinson, spending six months working in an NHS hospital in Rotherham. He hadbeen asked by its chief executive to consider how to shorten waiting times. Experiencingthe NHS at ground level after two decades of continual upheaval, Robinson seemed perpetually close to despair. The service was in siege mode, all but unmanaged. He setabout trying to bring some order to the chaos by confronting the chief blockage, consultant resistance, and achieved a remarkable improvement in service.

The natural response would be to conclude that all NHS hospitals need a Robinson. Butsince all cannot be so blessed, why should any one be? Is it fair that waiting lists in onepart of Britain should be different from any other? Is that not inequitable? The essence ofa nationalised service is that all should be treated equally, not least the sick. Hence theNHS structure of reporting lines, league tables, penalties and incentives, all directed atachieving that goal of state socialism since the Webbs, equality of outcomes.

The equity trapGovernments elected to improve public services cannot ignore a responsibility to deliverthem fairly to all electors. Ministers are obliged to strive after standard waiting lists, stan-dard school attainment, equalised crime clear-up rates, 999 response times and wasterecycling. Yet while such equity is the prime mission of the welfare state, it still seems awill-o’-the-wisp, no sooner approached than disappearing over the horizon.

Recent proselytising for the “new localism” has run slap bang into this equity trap. Thenormal managerial response to the defects of large organisations is to delegate, but del-egation risks widening rather than narrowing performance. So government attempts toallow “earned autonomy” to hospital trusts, school governors and local councils have fall-en foul of central accountability and Treasury control of pay and investment. What if onetrust poaches staff from another? What if one institution joins with private partners andsteals a march on a neighbour? Does the centre reward it by allowing its users to enjoy abetter service, or penalise it by redistributing its surplus elsewhere to backsliders? DoesWebbsian equity apply to welfare institutions, or to individuals whatever the institutions?

The enemies of localism have seized on these conundrums. The public will not stand forwide divergences in service delivery, they claim. Ministers are harangued by the mediawhenever performance varies geographically. League tables may demonstrate diversity


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but they speak the language of equality. The political culture treats Britain as inherently acentralised country, with devolution and diversity of services a cost it is not prepared topay. This opposition becomes the more vociferous if devolution extends to local taxation.

The control over local resources through “policy silos” – Gordon Brown’s contribution toBritish centralism – leaves no room for fiscal discretion, no scope for local priorities.Central targets must be tied to central funds. Anything else, wrote the minister Yvette Cooper in 2004,1 would open the door to “the worst kind of nimbyism, divisiveinequalities and deep conservatism”. (Blairite ministers have clearly not heard of Poplarismand the glory days of discretionary local tax-and-spend.)

Any student of modern democracy must be baffled by this. Certainly, executive delegationtends to vary performance. But if Leninism and capitalism taught one lesson in commonit was that very large organisations collapse under the weight of their own command and control. Britain’s public administration, now the most centralised in Europe, offers abundant evidence of this. The Home Office, the NHS, agencies responsible for schoolexaminations, farm payments, criminal records, child protection, identity cards, legal aid,invalidity benefit, defence supplies and computer procurement are regularly declared“unfit for purpose”. Detached from their users and answerable only to short-term, media-fixated ministers, their reform defies the best minds (and consultants) in the land.

On grounds of efficiency alone it would make sense to delegate most central services to the smaller units represented by local government. Local councils are not allowed to budget for deficits. They outperform central departments on almost all audit measures(see reports of the local Audit Commission versus the catalogue of woe from NationalAudit Office). They have left Whitehall standing in meeting the Gershon targets for staffcuts. Had recent failures in Home Office record keeping or farm payments occurred inlocal government, the nation would have exploded in rage. Yet in central governmentsuch fiascos are regarded as exceptional, not systemic.

Delegation is a commonplace solution to bureaucratic overload. But in government itoffers another advantage. It not only galvanises local management, without which all bigorganisations decay, but it also legitimises any resulting variation in performance throughlocal democracy. Where devolved power leads to unequal outcomes, the local franchisevalidates that diversity. If people in Durham want a particular waiting list shortened or a

1 In: Making Sense of Localism (Smith Institute, 2004)


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new Asbo regime or an art gallery sponsored, that is their decision. They should vote forit and they should pay for it. That, after all, is what happens in every other democracy in the world.

Such “subsidiary option” is strongly defended by the denizens of Westminster in resistinginterference from Brussels. Inequity of states within the boundaries of Europe is validated bynational democracy. Yet Westminster will not tolerate it at subordinate tiers of govern-ment, whether or not validated by local democracy. A paradox of today’s neo-Thatcherismis that it awards “earned autonomy” to local councils and school and hospital trusts, yetpenalises them when the resulting priorities are different from those of ministers – as inhousing or drug prescribing. Ministerial dirigisme reflects Pope’s warning that:

With the same cement, ever sure to bind,We bring to one dead level ev’ry mind.2

If London, why not Leeds?In 2000 a gesture of self-denial went into devolution to Scotland, Wales and London. Yetif such devolution was acceptable for Scotland and London, why not for English countiesand cities such as Cornwall, Yorkshire, Leeds or Manchester? In this age of outsourcing andsubcontracting, size is not an issue. Smaller states tend to be more efficient at welfarethan big ones – witness Denmark, Switzerland and the various German Länder. At any rate, none is bigger than England: the unit of administration considered viable for the discretionary administration of most public services is 400,000 in Luxembourg, 500,000 in Denmark, 4 million in Germany and, today, 50 million in England. The US state of New Hampshire has only half the population of the county of Hampshire, yet decidesalmost all its internal services.

Democratic lore holds that government should operate as close as possible to those electing the governors. Power should be delegated upwards, not downwards. Every pollindicates that trust diminishes the further government strays from the consumer. Peoplehave faith in their doctor and local hospital rather than in “the NHS”, in a teacher andpoliceman rather than in the relevant Whitehall department, in a councillor rather than in an MP.

In most democracies, the central legislature lays down national minimum standards for

2 Pope, A The New Dunciad (1743)

public services but leaves it to localities to interpret such standards according to their ownpriorities. Only in Britain does central government consider itself omniscient and omni-potent in imposing its priorities across the entire spectrum of public services – currentlyto the tune of between 600 and 1,000 targets, depending on definition. A bus company issubject to 29 performance targets, a hospital to over 100.

This degree of central interference is unheard of elsewhere. Yet only in Britain is there suchoverwhelming public dissatisfaction with the resulting delivery. One reason must be that,to sustain “stakeholder input”, central government now appoints some 60,000 quangoand other agency members, against 22,000 elected councillors. They spend four hourswith the public against 11 hours with each other, while councillors spend twice as muchtime with the public as in their offices. Nothing better illustrates the state of modernBritish government or the reason for public dissatisfaction with it.

Each European state has a different pattern of devolution to subnational democracy, but none is so paltry as Britain. In the government’s own balance of funding review, conducted prior to the aborted 2004 reform of local finance, research was conductedacross Europe. How much local inequality, it asked, could a nation stand before centralgovernment intervened to impose uniformity? Since most of the countries studied haddecentralised their government since the 1980s, it was a pertinent question.

Localism is working across EuropeIn each case the equity trap was resolved through the vigour of local participation. InScandinavia, closest to Britain in political culture, decentralisation of tax-raising powershad led to variations in service delivery. In other words the trend to localism had led tosome inequality, the “postcode lottery” feared and ridiculed by British centralists. Yet suchlocal choice had not proved unpopular. National minimum standards remained in placeand there had been a marked increase in local innovation – such as the celebrated “free communes”.

The balance of funding review found “at least five different policy models from traditionalsocial democracy to Thatcherite neo-liberalism” flourishing somewhere in Sweden. Anational parliamentary commission in 2004 recommended no change in local taxation,“since it has clearly encouraged a high degree of interest and participation in local politics by the Swedish electorate”.3


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3 See: Balance of funding review papers (ODPM/Cardiff, 2004)


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Similar diversity in France, Germany and Spain is entrenched in formal devolution. Yetthere is no evidence from any of these once-centralised countries that electorates do nottolerate the resulting geographical differences in service provision, or wish for a return tocentralisation. The one proviso is that localities vote for it. Given that such voting caninfluence local priorities, European election turnouts are on average double those in theUK. When democracy is allowed to exercise the courage of its convictions, it works. Insome places, such as France, Scandinavia and the Low Countries, diversity tends to be onlyat the margin. In Spain, Italy and Germany, it is far wider. Only in welfare entitlementsdoes central uniformity tend to rule the day.

Two principles underpin this conclusion. One is that local taxation should be plural and insome degree progressive. In Britain it is not, being based on a crude property valuation, ade facto tax on wealth as represented by living space. In the South East this council taxhas become virtually a poll tax as ever more houses fall within the top H band. This hasmade council tax ever more regressive and ever more unpopular.

Most countries make use of a variety of local taxes, with some reference to ability to pay.Most of them tax businesses or business transactions locally, if only to energise linksbetween local government and the chief engine of employment and local prosperity. InBritain those links were snapped when the business rate was nationalised in 1990 (thebiggest nationalisation by value in British history). New York City has seven local taxes,including a local income tax, with no undue damage to the urban economy. WhileAmerican democracy is everywhere idiosyncratic, a rough equivalence exists between tiersof government, taxation and perceived accountability. Local taxation is usually far higherthan in Britain, yet is not widely seen as unfair.

The Cooper fallacyWhat might be called the Cooper fallacy states that local discretion leads to “nimbyismand conservatism”. The evidence is the opposite. Foreign experience suggests that localautonomy closely allied to the quality of service delivery tends to increase faith in publicservices and thus a willingness to pay more for them. The boost to satisfaction establishes avirtuous circle: which may indeed be why European public sectors tend to be larger thanBritain’s. The council tax is nowadays treated as a national impost for which central, notlocal, government is responsible each year, and is intensely disliked.


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The second principle of subsidiarity stipulates that equity in a democracy must be seen to exist not just among individuals within a community but also among communities within a state. Hence the need to redistribute resources as between rich and poor cities,provinces and counties, whatever tax discretion they may enjoy. Resource redistributionthrough central grant is practised in every democracy and is hardly rocket science, yet itis persistently used by centralists to protest against any revival of local fiscal discretion in Britain.

Two-thirds of total public revenue in Denmark is local. In Sweden the figure is 50%, in Germany 18% and in France 13%. In Britain it is a meagre 4%. Yet all these countries contrive to use central grants to reallocate local funds from rich to poor areas. Indeed,financial discrimination in favour of poor schools in Sweden is greater than in Britain. Thedifference is that the money is transferred with fewer strings attached, usually under the “fund and forget” principle of block grant abandoned by Gordon Brown soon after coming to office because it gave him insufficient control over local council priorities.

There is no shortage of models for grant redistribution. The balance of funding review presented a number of them, including schemes presented by the Local GovernmentAssociation and by those gurus of resource equalisation, Iain McLean and AlistairMcMillan.4 The latters’ plea was for simplicity, with an impartial commission (not ministers) allocating grant on published criteria of needs and resources. Britain’s existingequalisation formulas are so complex that no sense can be made of them except by mathematicians, with the result that they are easily corrupted by politics.

Critics will reply that the more savage the redistribution, the less the “bite of the franchise”. This is clearly true, but it does not negate the case for fiscal discretion with central tax redistribution. Nor does it require the redistribution to be ring-fenced andcurbed, as in Britain. This is a nation compact enough for wide disparities in services to be unlikely and unacceptable. Legislated minimum standards will always be close to maximum ones. What is different is the freedom of subordinate councils to do better, tochoose their own priorities and, to that extent, “own their government” rather than feelit is imposed from on high. This was the case in Britain before Thatcher’s centralisation in the 1980s.

Just as local government pioneered utilities and public health in the early 20th century,

4 McLean, I and McMillan, A New Localism, New Finance (New Local Government Network, 2003)


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so after the Second World War it pioneered education and housing. Even under Thatcherlocal councils moved faster than Whitehall as pioneers of tendering and outsourcing. Withthe exception of London and Liverpool in the 1970s, councils were never as financiallyspendthrift as the Treasury. As Tony Travers has shown,5 local councils throughout the1980s and 1990s increased their spending nothing like as fast as central government.

It might appear that the worm is turning. Localism has become the buzzword, though itis impossible to name a single localist measure taken by the present government since theinitial devolution to Scotland, Wales and London. While the framework of central controlis periodically simplified – for instance, some targets are combined – it is no more than arearrangement of furniture. Such concepts as David Miliband’s “double devolution” orRuth Kelly’s revival of our old friend, the “city region”, do not progress beyond a speechreference. Localism is still a Westminster conversation, far from the seismic shift of therest of Europe.

Had Britain’s hyperactive, media-accountable centralism achieved both equity andimprovement in welfare delivery, it might have a case to defend. It has not. Abroad, localism is now the ruling ideology of public-sector reform. It is rarely stable, often contested and controversial. Centre and periphery have always argued over power andmoney. But the message of the past quarter-century is clear. Wise government renders tothe centre only the things that must be central. For the rest let locality rule. It is more efficient, more accountable and more popular that way. It is true that strict equity is compromised by geography, as it is compromised by all features of democracy, but suchcompromise has always been the stuff of politics.

5 In: Butler, D, Adonis, A and Travers, T Failure in British Government (Oxford University Press, 1994)


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Chapter 2

Involving citizens in local governance – experience fromNewham

Sir Robin Wales, Mayor of Newham Council

Involving citizens in local governance – experience from Newham

As one of the first mayoral authorities, Newham has been at the forefront of radicaldemocratic reforms. Well in advance of the recent legislation, we have been taking thenext steps towards revitalising local governance and pushing decision making closer topeople. Yet compared with the step that gave us a directly elected mayor, it will be alonger and slower process to inspire and build democratic and civic renewal in our communities.

There is a danger as local government moves towards involving communities more indecision making and service delivery. We must avoid focusing too much on new forms and structures, but must concentrate on what devolution should deliver for people. The outcomes must be paramount. Otherwise, we risk simply creating new tiers of “empty governance”, on a smaller scale but with no more legitimacy or popular engagement thanat present. It is foolish to assume that simply reducing the scale of a new body or forumengenders more effective local governance. Critically, new structures must foster andbuild the social capital in an area and deliver, in unambiguous terms, things people want.

We have been struck by the similarity of the risks and problems local authorities facewhen trying to push decision-making structures closer to people. I would describe this as“empty governance”, and I’m sure it will strike a chord with many in local government.These similarities are as follows:

• Narrow representation: only an interested few engage with new structures ofgovernance. Forums become talking shops for those with an axe to grind, and wideropinion is subjugated to the loudest and most articulate voices.

• Divorce of power from responsibility: neighbourhood groups and a variety of othersectional interests can exert a strong influence and force change at a local level.But rarely can their constituencies call them to account for the decisions they makeon their behalf, and not all groups have the same ability to promote and articulatetheir interests.

• Failure of delivery: the critical question to be asked of any new structure is whetherit will deliver what people want. Nothing drives disillusionment faster than a feelingthat it doesn’t make a difference if you engage or not. And too often residents saythat they cannot see the effect when they engage with new neighbourhood processes.Furthermore, we cannot let the hard-won improvements in local government overrecent years lose momentum as we try to make our services more reactive. Some


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espouse a path where we devolve services to neighbourhoods and just let them get onwith it. If it goes wrong, it’s their problem. This disregard for the outcomes of policiesfails to realise that good outcomes inspire participation and belief in local democracy.

• We cannot consider new governance structures in isolation: the failures of democraticengagement are the result of social and cultural change as much as of the size anddistance of local institutions. Consequently you cannot just tackle engagement in aninstitutional fashion. The wealth and social capital of different communities arecritical to the level of democratic engagement. This too has to be tackled by anydemocrat serious about having connected and engaged communities.

• Finally, local authorities must avoid the temptation of dreaming up structures andprocesses in the town hall and then imposing them wholesale on their citizens.Devolution cannot be done in one step, but must grow as organically as possibleso that it is shaped by what people really want.

Local government should not consider new structures and processes as the end goal of“devolution”, whether that’s community forums, neighbourhood governance or newparish councils. Structures and new processes will be important, but if we perceive this asthe goal of our policies we will miss what is important to people. We in Newham will judgeour success by how well people believe they can get involved and influence. Do they feellistened to? Do they believe they can make a difference to the things they want to affect?Do they feel in control of things that happen in their neighbourhood? Are there realdebates about the issues in an area or do people just make demands on the local authority for their personal needs?

Newham’s effortsOur neighbourhood policies are designed to deliver these outcomes without falling intothe traps outlined above. We put elected politicians at the heart of our arrangements anddo this unashamedly. There are those that think local government is blighted by “too muchpolitics” endangering smooth administration. But local government is as much about com-peting choices and conflicting demands as is government anywhere. That means decisionsneed to be made and policies influenced in a way that is accountable to everyone in acommunity. And the most visible and direct accountability happens at the ballot box.

We divide the borough into community forum areas corresponding as closely as possibleto areas with which people identify. For each community forum area there is a communitylead councillor – a councillor with particular responsibilities and powers. These memberstake a strategic role, deciding with people in an area what needs to be done, improved


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or changed, regardless of whether it falls under the local authority’s direct remit. It is obligatory for officers to consult and involve lead members in any decisions affecting the community forum area. The lead member, in turn, is obliged to work with the other councillors in an area and the local communities to ensure that their views influence whatis being decided. Lead members can also trigger action from officers on issues that cometo them from councillors and the local community.

The role of the lead member ensures that the representative is at least accountable at theballot box. Yet we are expanding the ways councillors will be accountable. We are goingto measure directly the outcomes stated above and we are going to simply ask peoplequestions like “Can you influence what happens in your area?” or “Do you know who yourcouncillors are?” or “Does the council react to what you want?” In this way, rather thanassessing irrelevant proxies for engagement, such as meeting attendance figures, we justask people straight about the outcomes devolution must deliver. Using a survey method-ology ensures that everyone’s voice is given equal weight and those with most to shoutabout do not distort the picture. These figures will be public. We will be able to trace the progress of our policies by the outcomes that matter, and we will see where leadmembers and councillors are most effective – and where they are least effective.

The lead member structure also channels and prioritises multiple and conflicting demands.In a diverse area such as Newham we have a multitude of groups making differentdemands on the council for the benefit of their own constituencies. No organisation,regardless of its size, can deliver in this way. Mature and effective local democracy needsthe balancing of demands, an understanding of the need to prioritise and the capacity tobuild something collective and shared. So the role of the lead member is to stimulatedebate in the community and gain the widest coalition of support for the actions thatpeople want or the decisions they want changed.

The lead member’s role in building consensus and stimulating debates about priorities andcapacities helps push a cultural change that is a step beyond the council simply reactingto individual complaints and grievances. Genuine governance requires genuine debateand a recognition of the constraints and capacities of different actors in an area – thecouncil and the local community alike. We encourage and use council resources to expandmore localised media where debate and discussion can reach the widest audience.

When higher efforts are neededClearly, there will be issues and problems that are beyond the influence of the lead

members and councillors, and for our policies to be credible we must deliver on these too.Issues that affect strategic plans or major corporate priorities, or are the responsibility ofpartner agencies, will need to be dealt with at a higher level. Telling people that the thingthey want isn’t a priority or isn’t in the budget cannot be good enough. If we are seriousabout devolution, we have to make local concerns count at the highest level and ensurethat budgets can be changed and priorities altered.

This is a problem with devolving to structures that are too small and too local. Often thethings people want to see in their neighbourhood mean significant organisational changeor changing the actions of other large organisations. We cannot patronise people by onlygiving them the levers to install a park bench or have the grass cut more often. Peoplesoon get fed up of structures that cannot deliver because they cannot influence otheragencies like the NHS or because they carry no clout with businesses.

That is one of the advantages of the mayoral system in local government. Community leadcouncillors can approach me directly on issues where their influence ends, and I can direct the local authority or work with partner agencies at the highest level to see if we can make changes. In Newham elected members, the mayor or councillors, are “of the community” rather than “of the council”, and so we take responsibility for anything that affects local people, not just the things that come under the local authority’s serviceprovision.

Indeed, in Newham more and more agencies, public and private, are accepting the politicallead they get from me and from the community’s elected members, even if they statutorilydo not have to. For example, the chair of the primary care trust sits on my cabinet nowwith other local authority portfolio holders. People do not understand public serviceboundaries and do not care about them. Devolved arrangements must have the vision andcapacity to work beyond them in order to effect significant change.

The above describes the things that are in our direct control: the structures and processes.The bigger and harder question is: what will make individuals engage with their councillors,lead members and community forums? How do we inspire a cultural change in Newhamto address what in large measure is a social and cultural problem? We must focus with an equal vigour on the revival of the civic sphere. By that I mean an expansion of the occasions whereby people do things together, for their benefit or the benefit of others.That means setting up sports clubs, getting involved in community events, volunteering –the things that expand people’s stake in their neighbourhoods and increase their interest


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in their neighbours. Expanding these types of activity will give more people the experienceof doing things through community structures and thus build their confidence to engagewith the council about what they want.

The importance of this type of activity to effective democracy has been given too littleattention in discussions of local government. We would do well to look back at the earlytheorists of modern democracy. When Alexis de Tocqueville visited the new democracy ofAmerica in the 1830s, he noted that:

[the] American people … is the one whose practical political education is the mostadvanced … [because] Americans of all ages, stations in life and all types of dispositionare for ever forming associations. There are not only commercial and industrial associa-tions … but others of a thousand different types – religious, moral, serious, futile, verygeneral, very limited, immensely large and very minute.1

Getting people involvedLocal government leaders should strive towards this picture, where active civic societyblends organically into structures of government and decision making. When we describegetting people “involved”, we mean this in the widest sense. Involvement in clubs, societies and groups empowers people to engage with their elected representatives and local council. We want to be part of a revived civic sphere, not above it or outside it. We don’t want people to need, or feel they need special skills to communicate with us, orgo through difficult processes to influence. We want them to feel that through theirelected members the authority is simply part of their community, in which all sorts of civicaction and activity takes place.

We cannot of course create civic renewal overnight, but local authorities can do plenty topromote it. We have already raised the number of sports clubs in the borough from a pitifully low number to equal the national average, by setting up hubs where people canuse facilities cheaply and get support and advice to run their enterprises. We will allowour community centres to be used cheaply or free by anyone who wants to set up something new.

We are putting real funding into this agenda. We aim to give out £1 million worth of “gofor it” grants over two years. These are small grants, up to £5,000, for people to set up their

1 De Tocqueville, A Democracy in America (1835–40)

own clubs, associations or for any type of communal endeavour. We are reorienting ourcommunity forums away from the “talking shop” model, to being action hubs where people get together and, with the support of the council, do things that improve theirarea – like finding funding for new facilities or starting volunteering programmes. Theywill still serve their function as places where people can express their opinions about their neighbourhoods, but we hope that by doing things and running events more peoplewill engage.

This aspect of our democratic agenda is crucial, and we do not think any local authoritycan ignore it. We know that new processes and structures on their own will not be effec-tive and will not achieve our vision of civic and democratic renewal in Newham. We mustdo more to inspire people to get involved and learn to do things for themselves. How thatvision will develop we don’t know, nor are we going to prescribe how things will run ineach area.

Community forum areas already display, as you would expect, varying ideas about whatthey want to do and the things they want to focus on. As long as people are engaged,active and involved, we are happy as an authority to see where the path leads. Some areaswill need more support than others, and some will gather their own momentum quickly.We, like any local authority, must be both prepared for and relaxed about this, as long aswhat happens delivers what people want and they can tell us that it delivers.


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Chapter 3

Modernising accountability –reform to secure new localism

Heather Hancock, Partner at Deloitte


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Modernising accountability – reform to secure new localism

Despite media assertions to the contrary, in the last 10 years the government has madeconcerted efforts to accelerate the devolution of power away from Whitehall. Underlyingthis shift has been the government’s desire, pursued with constancy, to achieve its objectives more effectively, more quickly, and with more tangible impact on the peoplewhom it is meant to aid. The government wants a meaningful, two-way relationship withthe citizens it is meant to serve: it has recognised that bringing delivery structures closerto the individual and community level will enhance the credibility of that relationship.

New localism was conceived to enhance citizen/government relationships through thegeneration of more local connections and specifically local decision making. The powerthis generates is intended to achieve better-targeted delivery, responsive to the needs ofcitizens, supporting the reinvigoration of local democracy and reinforcing the quality oflocal public services.

More recently, the debate has moved on to what is described as “double devolution”: thetransfer of powers first from central to local government, then from local government tothe very local, neighbourhood level. The political philosophy is to return power from stateto people, to reinvent the way in which government happens so that citizens becomemore active, and communities more engaged and empowered, in an open debate aboutpolicy, priority, and delivery.

However, to realise the ambition of new localism, and fully exploit the potential of double devolution, we need to be confident that there is a fit-for-purpose accountabilityframework for the emerging structure of government. Others in this publication explorethe implications of new localism in the local authority context. This contribution looksback to the centre. What does new localism mean for the Whitehall tier of government?Specifically, does it demand a radical modernisation of the accountability regime toenable localism to deliver on its promise? And what are the consequences for howWhitehall defines its own role: is reform at the centre essential to create the bedrock forsuccessful localism?

The core themes explored here are as follows:

• In recent years, the policy and delivery landscape has got messier, more confused andmore difficult to navigate.

• These complicated structures, and frustrations about effective delivery, have obscureda fundamental conflict in the centre’s roles, specifically in the exercise of accountability.

• For localism to work, we need an integrated accountability framework that resolvesthis conflict and allows the policy/delivery landscape to be judged as a piece, whilerecognising specific responsibilities within it.

• This brings a need to reposition and clarify the role of Whitehall. Its responsibility forexecution of policy needs a higher priority, alongside its excellent traditional role forpolicy formulation.

It’s all very confusingThe established paradigm for policy initiatives is for ministers to identify what change in service or delivery they want, and the outputs they wish to obtain, and for Whitehallcivil servants to review the evidence base and then in isolation to design a so-called policy lever to deliver the outcomes they believe the minister wants. One of the visible frustrations of Cabinet members over recent years has been the lack of impact when theypull on these levers for change. Senior ministers, despite political command, (relatively)deep pockets and extensive departments, cannot make these levers work to their satisfaction. This is due in some measure to the complicated – often unintelligible – designof public service delivery, which has client, delivery and oversight roles played out at multiple levels with no clear separation of function.

The extended enterprise that is UK public service today has no consistent principle of subsidiarity underpinning the way it looks. The political emphasis on tangible deliveryimprovements has spawned a bewildering variety of new organisations to create thecapacity to achieve change on the scale, and at the pace, sought by ministers. There hasbeen an explosion of intermediaries. Alongside central, regional, local tiers of government,we have added agencies, non-departmental public bodies, commissions, regulators; andthen partnerships, delivery vehicles, area forums, stakeholder communities and so on.Many of these structures were created on perfectly sensible analyses of how policy neededto be delivered. It is just that the implicit assumption that a policy/delivery vacuum preceded each of them was mistaken.

So, we have in the past 10 years – and there are plenty of other examples from early years– created a complex interwoven structure for public service delivery. There is no rationalargument for why it looks as it does, except perhaps that it is easier, and more exciting,and more “announceable”, to start new things than to dismantle old ones. Ministers sincetime immemorial have tended to be better at creating more/new government than they


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are at removing obsolete government. Every new policy initiative really ought to tidy upbefore it begins, but usually the centre averts its eyes from the discarded, half-consumeddelivery structures that preceded the latest initiative.

In the private sector, merger and acquisition activity would soon mop up the inefficientstructures and the poorly performing agencies and bodies. Government has not yetproved robust enough to tidy up this landscape. In 2003, the Haskins report on the delivery of rural services identified multiple public bodies occupying niche positions, withoverlapping or non-aligned responsibilities. Haskins nailed the problem as the failure to separate powers for policy design and delivery responsibility, recommending that a clearer division between the policy process and delivery functions would raise the qualityof both and increase accountability.

Widespread devolution of rural delivery arrangements, according to Haskins, wouldimprove the focus on need and make the system much more user-friendly, overcomingthe uncertainty of the customers of the Department for Environment, Food & Rural Affairsabout their entitlements, the regulations applying to them, and knowing who to holdaccountable for performance.

The Leitch report into future skills provision is only the latest example of comparable problems. Predictably, Leitch identified that the structure of skills delivery was focusedmore on the supply side than on the demand side, was causing competition for roles and finance, and distracted the focus away from long-term goals because of the energy that goes into managing the stakeholder environment. The very multiplicity of bodies frustrates the co-ordination of delivery. Roles and responsibilities become confused,organisations lose their clarity of purpose, and it becomes almost impossible to explain tothe service user just where accountability rests.

Furthermore, the central Whitehall culture inhibits change. Government departments areaccountable to ministers for their departmental responsibilities, but very loosely held to account for their contribution to pan-government responsibilities, because of the weakness of the Cabinet Office. Accounting officer behaviour suggests they think they areonly responsible for things they control directly. That is unsurprising: they are mostly onlymeasured on the things they control directly. When the public service agreement systemtries to measure the extended influence or enterprise of a department, it quickly dissolvesinto a fog of stakeholder-speak or drowns in targets. At the central level, governmentdeals with people’s need differentiated by department. It would do better if it specified an


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overall need around which government coalesced to find and deliver solutions, and thenensured that the agencies were empowered to deliver them.

We have to remember that the machinery of government is deeply uninteresting to the citizen. Citizens are not concerned whether they are dealing with local, regional or central government, or how hard it is to align all these interests. They simply want to beconfident that they can access services that are shaped to meet their needs, deliveredeffectively, and to know where and how they can influence improved performance. That is what localism is driving towards.

An accountability regime that reflects delivery realitiesIt is against this background that localism is trying to achieve change. Devolution has seenfunctions transferred from centre to local level. It has transferred some responsibility forthe management of money and resources from the centre. It has opened up some greaterinfluence over the allocation of resources, though not (yet) radically changed local influence over the amount or source of money available for local delivery according to local demand.

But accountability structures have not been reformed or even relinquished to keep pacewith these changes; at best accountability has been duplicated, in that the centre has clungto the concept of its overriding accountability for policy, delivery and resources, even whenits own functions and responsibilities are no longer so all-encompassing. This applies tothe position of ministers, who, reluctantly or enthusiastically, are still drawn to answer fordecisions that are about delivery priorities at local level; to inevitable overlaps betweenthe National Audit Office and the Audit Commission; to an ambiguity in the accountabilityrole played by the regulators in their role to secure and assure compliance; and to centraldepartments, with a self-perception that they are integral to the oversight framework.

We have an accountability regime developed by the centre and applied outwards from thecentre. Furthermore, it is an accountability regime that, in its fundamentals, is virtuallyunchanged over the century or more that Whitehall has been operating the model of “public administration” – with the professional cadre of the generalist civil servant administering nearly all our public services.

It is true that in recent decades we have moved to the notion that public service deliveryis about management of public services, and most recently – in a change forced on thecentre by the new localism – we are looking towards leadership being the critical govern-


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mental component in the extended enterprise of public service delivery. But despite thesewelcome, if somewhat ponderous, changes, the accountability regime has not caught up.

Furthermore, where delivery responsibility has transferred from the centre, departmentshave often retained a sponsor or oversight role, reinforcing those complex delivery andresponsibility patterns referred to earlier. So we find Whitehall departments acting as policy maker, acting as “sponsor” or “commissioner” for policy outcomes to be deliveredby third parties, and acting as a filter for judgments about policy success.

Departments not only require those public bodies to which they channel resources toimplement policy, but they also have to submit complex corporate planning documentsfor approval about how in detail they intend to apply those resources. The negotiation andcompromise that goes into approving these plans makes the department an interestedparty when it then comes to judging delivery performance. There is no policing of theboundary between policy making and delivery. Yet no questions are raised by the fact thatthese very same departments are subsequently positioned as part of the oversight andaccountability regime for implementation!

This is a fundamental flaw. A system of intra-executive checks and balances cannot beappropriate as part of an adequate accountability regime. Departments are conflicted injudging delivery success as the flaws could well have been in their own performance.Apparent failures in delivery can be the result of poor policy design; of failure to createthe right environment for successful implementation; of telling the delivery agent whatto do and imposing constraints, rather than setting parameters within which there is theflexibility to deliver, and the incentive to deliver well.

Departments cannot behave as if, having formulated the policy, they can hand it over to the chosen delivery agent with no more active responsibility for its success save to oversee implementation performance. Departments have a mutual responsibility for thesuccessful delivery of policy for as long as that policy exists. The mistake is to think thattheir responsibility in some way is an aggregation of the delivery function, or invitesmicro-management of that function.

The on-going departmental responsibilities are:

• to avoid introducing new policy that has an unintended consequence of makingcurrent delivery more problematic;


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• to nurture a broader policy and stakeholder environment that creates the conditionsfor successful delivery;

• to pursue a consistent delivery strategy; and • to promote transparency through its administration of financial and performance

incentives, which recognise innovation in meeting citizen needs.

These on-going responsibilities mean that departments should have a defined contributiontowards accounting for policy success, but ought not to be a channel for delivery bodiesto be held accountable.

The government is committed to carrying on separating policy development from policyimplementation and, to reinforce that separation and increase public credibility, to pursuelocalism, devolving the delivery of policy to regional and local networks. We may yet seethe ultimate separation of policy and delivery – perhaps even the establishment of theNHS as an arm’s-length agency from the Department of Health. And the more that poweris devolved, the more accountability must be strengthened to capture the complexities of the devolution model.

The roles of the audit bodiesTo be pragmatic: we are decades from having implemented a simple codification of principles on which devolution of powers and function takes place. In these circumstances,the accountability regime cannot follow the same route up from the citizen’s receipt of aservice as the policy/delivery route followed in providing the service to the citizen. Weneed an accountability solution that can accommodate and work through the complica-tions of policy making and delivery implementation. Outside the departmental context,we must therefore examine whether the roles of the National Audit Office and the AuditCommission are consistent with localism.

The National Audit Office’s remit focuses on assurance about resource management bycentral departments, their agencies and quangos, in the context of the responsibilities and obligations that parliament has conferred or approved. In addition, the National Audit Office supports a scrutiny process driven by value-for-money reviews. The AuditCommission performs a comparable assurance role for local government (although without the equivalent parliamentary scrutiny) to consider its conclusions; it also deliversperformance assessment and value-for-money analyses of local government. Both organisations add value to the delivery of public services, but their contribution is diminished by being almost exclusively retrospective.


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More significant is that localism – with its complex layers of policy and delivery, discussedearlier – means that holding the public sector to account for the achievement of policyobjectives crosses the boundary between the National Audit Office and the AuditCommission. Take the case of housing market renewal, a major component of the government’s policy on sustainable communities. The Department for Communities & Local Government established the housing market renewal programme to revive under-performing housing markets. It focuses on areas where oversupply of inappropriate or poor-quality housing and the undersupply of attractive owner-occupied housing are compounded by low affordability and absence of value uplift, to support private investment in rebalancing the market.

The department selected the initial pathfinder areas where there were severe structuralfailures in the housing market. Local authorities took responsibility for developing strategiesfor tackling these structural failures, often working across administrative boundaries.Housing market renewal pathfinders are supported by a specific funding allocationapproved by the department on the basis of area strategies submitted to the department.

In many cases, bespoke delivery or co-ordination structures have been established, underthe direction of the local authority partners. The private sector is a critical part of physically restoring the housing quality, changing the housing mix and, ideally, providingfinancial solutions. Regional bodies are involved in decisions that affect spatial planning,infrastructure investment, alignment with broader regeneration schemes and finance. Insome cases, there is a regulatory dimension provided by the Housing Corporation, whichis a non-departmental public body. The department reviews and approves the strategiesbeing pursued by the pathfinders, and monitors progress and performance.

But as must be clear from this description, there is not a single accountability frameworkthat connects the policy-delivery continuum for housing market renewal. The NationalAudit Office can examine the departmental role in formulating the policy, allocatingresources, and arranging for implementation. The Audit Commission can examine the local authority remit for developing and delivering their implementation strategies. Otherregional and national participants tend to fall under the remit of the National Audit Officefor review. The role of the private sector, and the network of partnerships and joint delivery structures set up by the local authorities, are more remote from either oversightregime.

For such an important and expensive element of the sustainable communities theme,

there is no cohesive way to hold to account all the participants in realising the government’s objectives. The recent National Audit Office criticism of the plans for theThames Gateway bears this out.

A reformed approachSo, have the mechanisms for exercising accountability in the UK governmental systemkept pace with the devolution model? The evidence – democratic participation, engagementin policy making, willingness to serve – suggests that people are imperfectly connected todecision makers at local level and feel dissatisfied with their ability to identify whom theyshould hold to account.

Accountability ought to be a golden thread that guides one through the fabric of publicservices. But if ever it is clearly printed on the policy canvas, it is quickly obscured by thedelivery tapestry woven over it. To fully realise the political intent behind localism requiresthat this golden thread is visible, coherent and unbroken. And reforming the accountabilityregime creates an opportunity to enhance its independence, timeliness and robustness,and clearly separate it from the departmental/ministerial role.

The scrutiny role supported by a modernised accountability regime should be as proactiveas it traditionally is reactive – as powerful at the point of making policy and agreeing theexecution plan as it is in forming conclusions when the delivery dust has settled. It wouldreview the evidence on which policy is being formulated, and challenge the principles onwhich intervention is being designed. It would provide a point of reflection on the fitbetween policy intent and delivery impact, on the risks and the capacity challenges thatcould compromise the optimum policy outcome.

It certainly should consider the evaluation of impact, the success of delivery approaches,and whether the delivery roles were appropriately identified and implemented. There isreal value in the accountability and scrutiny structure holding an institutional memory,and itself having the power to commission research and evidence to inform its own effectiveness. This is an accountability and scrutiny function relentlessly focused onimprovement in service delivery to meet well-specified needs. The accountability regimeenvisaged here is independent, transparent, risk-based – and itself would be accountable.

For this to work, it needs to be clearly articulated in a simple framework of responsibilitiesthat avoids overlapping layers. Every part of government and its extended enterpriseshould be capable of accommodation in the same scrutiny process, so that joined-up


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oversight is a reality and no one can toss the accountability card over the hedge. A combined, or at least more closely aligned, accountability approach would look at outturn performance, compliance, policy formulation and execution, and implementationas components of the assurance and accountability expected by the citizen.

The new model almost certainly means bringing under one roof the National Audit Officeand the Audit Commission, strengthening their roles and ability to reach into the uncertainarea of public-private delivery (an area where both bodies are already testing the water).It demands a careful consideration of the role of the regulators in a standards system. Forcertain, it calls for a fundamental examination of whether the differences between eachpresent participant are sufficient to keep them apart, or whether their roles in assuringand scrutinising a complex delivery environment should drive them together.

Major constitutional issues are involved, particularly in the on-going debate on the roleand focus of the House of Lords. Its contribution as a revising chamber could be betterinformed by the outcomes of more proactive and timely scrutiny of delivery to the citizen. Their findings could feed into House of Commons scrutiny and strengthen parliament’s ability to hold policy makers and deliverers to account as well as embeddingthe lessons learned into future legislative and implementation approaches.

One of the most useful roles that parliamentary scrutiny can perform, with the support ofa reformed accountability regime, is to identify where delivery clutter needs to be tidiedup before a new policy approach is introduced. Linking local democratic accountability,the potential contribution of the regional level, and national government’s role in determining national priorities and goals is a further constitutional dimension to be refined, but would substantially repay the effort involved. There are long-standing challenges to be resolved – dealing with transition from ministerial accountability for policythrough to the executive responsibility in the commissioned providers of specific services.

Changing the role of the centreAlongside the debate about modernising accountability to meet the demands of localism,to optimise delivery success and build the confidence of and connection with the citizen,there needs also to be a shift in the balance of activity in central departments. While itwould be naive to expect the complicated pattern of delivery to be simplified overnight,a fit-for-purpose accountability regime for localism does need some change in currentarrangements – reducing the ability for the centre to persistently intervene in front-linedelivery questions, for example, not least because this blurs the lines of accountability.


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Clear performance regimes are assisted by clear accountability, and in turn drive efficientand innovative front-line services.

We can get closer to the ideal if we push Whitehall to greater clarity about three areas of responsibility: policy formulation, policy execution, and implementation to the point of service delivery. Policy formulation can be characterised as determining the desired outcomes, setting out the core principles underlying those outcomes, and identifying andclarifying the specific role of government. Policy execution is about clearing the way for the optimum delivery model to have the best chance of success. And policy imple-mentation is about the responsibility for determining and creating the operating model,within an agreed resource framework, which achieves the required outcomes and impactsat the front line.

Policy formulation is something that central departments generally do well. It is treatedas a “gift wrapped” service to ministers. But gift wrapping policy execution – the environ-ment in which the policy can flourish and be optimised – is a more useful contribution toa government that prioritises delivery. More departmental time and resources should bedevoted to policy execution.

Developing policy without informed consideration of realistic implementation strategies,as well as separating accountability for policy formulation from that of policy execution,are root causes of many public-sector delivery shortcomings. Policy execution examineswhat needs to be done to create the environment in which a policy can best succeed –where there may be unintended consequences, potential conflicts (in current versusplanned delivery, or in un-joined-up government), a need to harmonise direction or to tidythe delivery landscape up first. Policy execution gives visibility and clarity of thinking andoffers a framework for resolution. It offers a robust and realistic basis against which properly to judge subsequent progress, not just towards milestones on a project plan, butabout the proper exercise of governance and accountability.

This is more than the long-standing complaint that policy formulation is disconnectedfrom implementation – it is about creating a missing link in a rigorous policy executionprocess. It adds value for ministers because they are better sighted on the structural risksand challenges, the unintended consequences, the ground that needs to be prepared, theresponsibilities that must be shouldered, and the hard commitment – not tacit approval –needed from stakeholders, for policy implementation to have the best chance of success.It gives ministers a first line of defence, at least, for explaining progress on new policy that

inevitably takes some while to change the citizen experience.

It still requires a mature and resilient conversation between ministers and the electorateand the media about how long it will take to embed a new accountability regime, and thatmeans ministers have to stick to their position even when the heat is on to take personalresponsibility for local delivery decisions. Ministers and the public need to be confidentthat while the framework adjusts there are remedies for short-term imperfections, and torecognise that this will not be a “purist” solution, given electoral timeframes.

And the new accountability regime described above has clear points of connectionthroughout this process. Oversight ceases to become an “all or nothing” exercise once policy has been implemented. Instead, it becomes that golden thread that is visible and connected at the milestone stages.

Localism can transfer power to the citizen, and in doing so transform the delivery of public services. It is time for the debate about what this means at the centre – for an independent and fully external accountability regime and for the role of Whitehall – tofully realise that potential.


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Chapter 4

The further devolution of power in England

Don Stewart, Executive Director for Strategy at Yorkshire Forward

The further devolution of power in England

An objective observer could not help but conclude that the amount of progress made onthe agenda originally outlined in Bruce Millan’s Renewing the Regions report in 1996 hasbeen astonishing. From a starting position of one of the most centrally governed states inthe EU, the UK has established devolved parliaments for Wales and Scotland, and again inNorthern Ireland, and has placed the idea of the devolution of democratic governance inEngland as an accepted ideal. All this in less than 10 years is an astonishing rate of change,and yet has been accomplished with minimal difficulty and to a point where any suggestion of reversal is already largely unthinkable without major constitutional crises.

In England, which by default has now been specifically defined, the issue of regional governance remains unresolved. Economic direction has been clearly established atregional level with the creation of nine regional development agencies, which are noweight years old. This early new Labour policy response to a long-standing problem allowedthe development of far-reaching and consensually owned strategic blueprints for publicinvestment in regional economic growth.

That investment is not simply confined to the RDAs’ own budgets but provides a focus for all public investment. The policy also provides government itself with a ready-madeinstrument to respond both proactively and reactively to the impact, opportunities andthreats of economic globalisation. Events such as the MG Rover collapse, the closure ofthe Selby coalfield, foot-and-mouth and serious flooding are examples of that enhancedability to respond strategically at a regional level that did not previously exist.

RDAs are performing wellProactive developments on the innovation agenda regionally, as well as regional initiativeson the climate change agenda, reinforce the effectiveness of the RDA tool. Recentdetailed inspections of them by the National Audit Office have shown that they are, without exception, performing acceptably, with some performing at a very high level.Much more recent forays into wider multi-RDA collaborative working such as the“Northern Way” have shown early success at influencing other national policies on majorissues like transport.

There is also recent and convincing evidence to show that the productivity gap betweenEnglish regions and the regions of the wider EU, the cause of the original thinking behindMillan, shows a clear improvement. Stability of employment, increased levels of employment


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and steady growth are all reflected in this improvement. This is important not only interms of the positive success of a government initiative, but also because it suggests theright regional policy solution to correct many years of national policy that consistentlyfailed the North.

The one “failure” in this remarkable record of success for government policy has been the experiment with the devolution of democratic governance in England beyond the monolithic control of Whitehall. It could be argued that the November 2004 referendumin the North East to see whether the people wanted to vote for regional governance wasa bridge too far. But with any programme of change there must come a point where therate of progress exceeds the preparedness and capacity of the people to accommodate it. In the North East, and in Northern Ireland at different times, the rate of change exceeded the capacity available to achieve it. The difference was the amount of resourceput in to move the agenda forward. Whereas massive effort was expended on many frontsand by many people to resolve the issues in Northern Ireland, no resource at all has be

Documents

Localism Text Q6 - Smith Instituteways demonstrate what “new localism” and “double devolution” can realistically offer. Collectively they not only explore what could be achieved